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Option Expiry Strategies matter because expiry sessions move at a completely different pace. The market turns faster, option premiums drop rapidly, and traders often face sharp swings in a very short time.
During expiry, even a small move in the index can change the entire trade. Time decay speeds up, volatility rises, and positions that looked safe can suddenly flip. This is why knowing how to approach expiry with the right plan can greatly improve your results.
With the right option expiry strategies, you don’t need complicated setups or unnecessary risk. A clear, simple approach can help you control emotions, protect capital, and take advantage of quick opportunities.
In this guide, we’ll walk through practical expiry-day strategies that are easy to understand and suitable for all types of traders.
What Is Expiry?
Expiry day in the Indian share market is the last date on which a derivative contract, such as an options or futures contract, remains valid and can be traded. After this date, the contract becomes invalid, and all open positions must be settled or closed.
Every option has a fixed expiry date, and once that moment arrives, the market checks whether the option is profitable or not.
Key Points About Expiry in India
- Weekly contracts (like Nifty and Bank Nifty options) expire every Tuesday, while monthly contracts expire on the last Tuesday of each month.
- If Tuesday is a market holiday, expiry shifts to the previous trading day.
- On expiry day, option prices move quickly because time value drops to zero, and traders must either settle their positions or let them expire.
- Once expiry is over, the contract no longer exists. All profits and losses are finalized based on the closing price of the underlying asset on that day.
What happens on the option expiry day?
On expiry day, an option contract reaches its final stage. At market close, the price of the underlying asset is checked against the strike price to determine whether the option still has value.
- If an option is in the money, it has value and will be settled or exercised.
- If it is out of the money, it expires worthless, and the premium paid is lost.
As expiry approaches, the time value in the premium rapidly decreases. This is why option prices drop much faster on expiry day than on regular days.
Understanding these basics makes it easier to follow the simple, effective strategies we’ll discuss next for trading confidently on expiry day.
Strategies traders use on expiry day
Now you know how expiry day works, let’s explore the strategies traders use to handle this fast-moving session. Here are some option expiry strategies that both beginners and experienced traders rely on to spot opportunities and manage risk effectively.
This is one of the most common option expiry strategies. Traders sell options during intraday to benefit from fast time decay.
If the market stays within a range, the premium drops quickly.
Example:
If Nifty is at 25,800, a trader may:
- Sell 25,850 Call
- Sell 25,750 Put
As long as Nifty stays between these levels till the end of the day, both options lose value and expire worthless. The trader keeps the premium as profit.
This strategy works best in a sideways or stable market, but strict risk management is needed because sudden moves can cause losses.
Short straddle involves selling both a call and a put at the same strike price. This strategy is used when you believe the index will remain close to that level.
Example:
If the index is near 25,000, and this level is a strong support or resistance:
- Sell 25,000 Call
- Sell 25,000 Put
If the market stays close to 25,000, both premiums fall to zero and the trader keeps the full premium.
Your break-even points are approximately 25,900 and 25,100. If the market moves beyond this range, losses increase, that’s the main risk of a straddle on a volatile expiry day.
This is a high-risk, high-reward expiry day strategy. Options that are far from the current price become very cheap on expiry because they have almost no time left.
A trader buys these cheap OTM options hoping for a sudden, sharp market move.
Example:
If Nifty is at 25,800, and 26,000 Call is trading at just ₹2, a trader may buy it in bulk. If Nifty quickly jumps, the option can go from ₹2 to ₹20 or more. If the market does not move, the option expires worthless. This is a small-risk but speculative strategy.
Scalping means taking quick, small profits by buying and selling options rapidly. Near-the-money options move the fastest on expiry day, even with tiny market movements.
Example:
If Nifty is at 25,800, a trader may buy 25,800 Call at ₹24. If Nifty rises slightly and the option jumps to ₹30, they exit immediately and book a quick profit. This strategy needs fast execution and discipline.
Iron Fly is a balanced option expiry strategy used when traders expect the market to stay in a narrow range. It offers limited profit and limited loss.
How it works:
- Sell one call and one put at the same strike (usually ATM).
- Buy one call above and one put below to protect against big moves.
Example:
If Nifty is at 25,500:
- Sell 25,500 Call
- Sell 25,500 Put
- Buy 25,600 Call
- Buy 25,400 Put
You earn if the market stays close to 25,500, as time decay works in your favor. Your losses are capped due to the protective options.
Final Words
Expiry day can be profitable if you stay disciplined and use the right approach. Focus on option strategies that match your risk level, avoid emotional trading, and always use proper risk control. With practice, these option expiry strategies can help you trade more confidently and protect your capital.
FAQs on Option Expiry Strategies
Are cheap OTM options good to buy on expiry?
They offer high rewards but high risk. They work only if the market moves sharply; otherwise, expire worthless.
What is the safest expiry day strategy for beginners?
Intraday option selling on high-premium strikes with strict stop-losses is safest. It benefits from fast time decay and works best in a stable market.
How do I reduce losses during sudden expiry moves?
Use strict stop-losses, trade smaller lot sizes, and avoid overtrading. Check news, global cues, and open interest before entering trades.
What happens if I don’t square off my options on expiry?
In-the-money options get settled automatically. Out-of-the-money options expire worthless, and you lose the premium paid.
Can I make money on expiry without predicting direction?
Yes. Non-directional expiry strategies like iron fly and short straddle profit from range-bound movement and time decay.
Are there specific times of the day better for trading options on expiry day?
Yes. The first hour of market opening and the last hour before closing usually offer higher volume, sharper moves, and better liquidity, making them ideal for expiry-day trading.
Happy investing and thank you for reading!
Disclaimer:
This website content is only for educational purposes, not investment advice. Before making any investment, it’s important to do your own research and be fully informed. Investing in the stock market includes risks, and you should carefully read the Risk Disclosure documents before proceeding. Please remember that past performance doesn’t guarantee future results, and due to market fluctuations, your investment goals may not always be achieved.
